House Bill 431, also known as the "CEO Pay Disparity Tax Act," amends Tennessee Code Annotated to introduce a new section that imposes a pay disparity surcharge on companies whose top executive earns at least 100 times more than the median income of their employees. The surcharge will be an additional 0.1% added to the excise tax rate on the company's net earnings for the preceding fiscal year. The Department of Revenue is tasked with promulgating the necessary rules to implement this section in accordance with the Uniform Administrative Procedures Act.

The act will take effect immediately for the purpose of rule promulgation, while the tax provisions will be effective starting July 1, 2025, and will apply to tax years beginning on or after that date. This legislation aims to address income inequality within companies operating in Tennessee by imposing a financial penalty on those with significant pay disparities between executives and employees.